On November 16, Sina Corporation ((USA) NASDAQ: SINA), a leading online media company and mobile value-added service (MVAS) provider for China and for the global Chinese communities, announced its unaudited financial results for the quarter ended September 30, 2009. The top line results indicate that the company successfully grew its advertising revenues while merging its real-estate business into a publicly traded entity and raising $180 million in private equity to fund future acquisitions.

Key financial highlights include:

Net revenues of $96.4 million represent a 6.8% quarter over quarter (Q-o-Q) increase from Q2 2009 revenues of $90.3 million but an 8.6% decrease from the year earlier revenues of $105.4 million.

Advertising revenues of $63.8 million represent a 10.4% Q-o-Q increase from Q2 2009 ad revenues of $57.8 million but a 16.3% decrease from the year earlier revenues of $76.2 million.

Gross margin of 59% compares to 56% last quarter and 57% for the same period last year. Advertising gross margin was 61 and MVAS gross margin was 54%.

Mobile-related revenues of $30.9 million represent no growth Q-o-Q from Q2 2009 mobile-related revenues of $30.9 million but a 13.9% increase from the year earlier revenues of $27.1 million.

Net income attributable to Sina was $16.7 million, or $0.29 diluted net income per share attributable to Sina, representing a 25.2% Q-o-Q increase from Q2 2009 net income of $13.3 million, or $.23 per share, and an 11.4% decrease from the year earlier net income of $18.9 million, or $.31 per share.

“Total revenues for the third quarter of 2009 exceeded our guidance, as we saw double-digit sequential growth in our online advertising business in China, on top of a 35% sequential growth last quarter. We are seeing signs of a strong recovery in the advertising market in China in the second half of this year, and we expect this momentum to continue with continuing recovery of the Chinese economy.”
– Charles Chao, President, CEO and Director of Sina

The big news for Sina this past year has been in its corporate M&A and financing activities including:

Fresh off the announcement of their new smartphone operating system, bada – Korean for “ocean” (chosen to imply the vast, open opportunity of the technology) –Samsung Electronics Co., Ltd.

Galaxy Spica i5700

(SEO: 005930) shows that it is relentless in its ambition to grab a larger share of the smartphone market. The fact that bada will not be available until sometime next year is not going prevent the firm from making progress in the interim. Samsung just released the Galaxy Spica i5700 – it’s second foray into smartphones run on Android by Google Inc. (NASDAQ: GOOG). It will be first available in Germany by the end of the month, with a later roll-out date for the rest of Europe. So, there’s the ocean and the galaxy – quite ambitious.

It is an interesting move, since bada, once released, will be competing directly with Android. The system will run Google’s mobile services including search, Maps, Gmail, YouTube and Calendar. Other elements include Facebook and MySpace. It is also, reportedly, the first Android product to run DivX.

When it comes to online porn the Chinese government has a no tolerance policy and this past week we learned that Yahoo China (in Chinese) — owned by local e-commerce group Alibaba Group — has run afoul of it. According to a widely reported story, the Internet Society of China (ICS), a private (but government-linked) watchdog organization, has ordered Yahoo China to get rid of the pornographic content that appears on a photo-sharing site it had hosted.

Chinese authorities regularly monitor the Internet for porn as well as sensitive political discussions and other content considered harmful. In the past western companies such as Google Inc. (NASDAQ: GOOG) have run afoul of the ICS leading to Chinese authorities to block Google.com and Google Apps. In response to being blocked Google altered its search algorithm in China to block results that the government disapproved. As a result no Google sites appear on the latest list of sites flagged by the ICS.

According to Alibaba Group, the offending site is called Yahoo Space and it was a user-generated blog and photo site that was shuttered last month. If that’s true then it’s both an indication that the ICS is a little quick to pull the trigger on public censure of online services that are only loosely in violation of their regs AND that Yahoo China should be off the list the next time the list is updated.

We reported back in early August that the Wall Street Journal had written about speculation that Dell Inc. (NASDAQ: DELL) would partner with China Mobile Ltd. ((ADR) NYSE: CHL) to introduce the computer-makers first ever smart phone. Now this week Dell has finally confirmed its plans with a press release announcing that it will launch the Dell Mini 3 Smart Phone in China — with leading carrier China Mobile — and in Brasil — with Claro – part of the largest mobile phone network in the Americas, America Movil S.A.B de C.V. ((ADR) NYSE: AMX). The Dell Mini 3 is based on the Android operating system from Google Inc. (NASDAQ: GOOG).

So Dell has confirmed its plans to enter the smart phone market and its chosen a strategy of partnering with the largest global mobile carriers. China Mobile has more than 500 million customers, and Claro, which has more than 42 million customers in Brazil is part of the America Movil network which has over 190 million customers through the Americas.

It seems like these two deals are just a starting point for a global distribution strategy as Dell already has agreements with other leading mobile carriers, including Vodafone in Europe; Australia/New Zealand, AT&T and Verizon in the U.S.; M1 and Starhub in Singapore; and Maxis in Malaysia.

“Our entry into the smart phone category is a logical extension of Dell’s consumer product evolution over the past two years. We are developing smaller and smarter mobile products that enable our customers to take their internet experience out of the home and do the things they want to do whenever and wherever they want.“
– Ron Garriques, President, Dell Global Consumer Group

According to Ron Garriques, President of Dell Global Consumer Group, the smart phone is the logical next step in Dell’s strategy to diversify away from being just a computer maker. Earlier this year Dell was the first mobile PC manufacturer to embed China Mobile’s 3G technology and services into its netbooks and quickly became the leading seller of netbooks through retail outlets in China.

The Mini 3 smart phone is expected to be launched by China Mobile by the end of this month and by the end of the year for Claro.

It looks like the Korean government has landed itself between a rock and a hard cover — so to speak. The Ministry of Education, Science and Technology has planned to make digital school books a key initiative in the modernization of its education system but it has run into problems acquiring the appropriate e-book readers at an affordable price. The government had settled on a device made by LG Dacom — a unit of LG Corp. (KSE: 003550) — and Hewlett-Packard (“HP”) Company (NYSE: HPQ), but disagreements in pricing have threatened to derail the deal.

Basically here’s a breakdown of the plan that the government is looking to implement:

build an e-book infrastructures in 110 schools in rural communities as an initial test before a larger rollout nationwide,

spend about 18 billion won (about $15.5 million) on the entire project, and

purchase around 9,800 e-book readers at a price of no more than 1.1 million won (US$947) per unit.

So the government knows what it wants to spend but the device manufacturers are insisting that the price is unachievable. According to LG and HP they are unable to keep the price below 1.3 million won (US$1120) having already shaved off some costs related to the hardware used in the device. So the inability to reach agreement on the price may scuttle the whole deal.

“We already replaced the Intel CPUs with AMD chips, and switched the device from the HP2730 to TX2000, which in effect allowed us to slash the prices from the 1.5 million won (US$1290) to 1.3 million won (US$1120). It’s hard to make the e-book devices any cheaper than that.”
– LG Dacom representative

So now the government seems to be in a tough situation. They chose the consortium of LG Dacom and HP because it had the best device, beating out a mid-sized local computer maker Read the rest of this entry »